Today’s headline from the Financial Times of London, “Global food prices hit record highs, the UN raises alarm“. In case you were wondering where all that free money from the Federal Reserve is going. The markets are way up!
In the US, some food processors and manufacturers of consumer products like toilet paper and shampoo are sharply reducing the content of their standard sizes and are using clever packaging to hide the fact they are doing so. Things like big dents in the bottom of the jar, tapered necks to make them look the same height or by leaving more head room at the top. They often obscure the true size by changing the way the label is written to conceal the size reduction even if the consumer bothers to read it. The price hasn’t changed and that’s what most consumers look at.
The food behemoths claim they had to do this because of increased costs for food commodities and higher fuel prices. But smaller manufacturers haven’t done this basically because the actual food in a package is usually the smallest input cost. So reducing size doesn’t really save them all that much money considering all the changes needed for entirely new packaging and added handling required for the increased number of containers.
Why not just raise the price instead of completely changing the packaging?
Because if they can reduce the content by 20%, then instead of using 5 units you the patsy (I mean savvy consumer) will buy 6 ¼ units increasing their profit by 25%, even if the profit per unit stays the same. And, if the profit per unit is a little higher, multiply that too! Isn’t math wonderful. They are selling you nothing and making a profit on it, almost as good as a Wall Street derivative contract.
On this day in history: in 1914 Henry Ford introduces the concept of the minimum wage, paying no less than $5 a day. On this day in the future: in 2014 the Republicans achieve the century old dream of eliminating the minimum wage forever.
But, but the rich need to have consumers spend money for them to make money, don’t they? No, they don’t, during the gilded age before Henry Ford when most Americans lived in grinding poverty, the size of their mansions was even bigger than the ones they are building now (but not by much). The super rich are consumers unto themselves, they don’t buy mass produced goods. (how droll) Rolls Royce doesn’t need to make a million units. Ford got rich doing mass production but he didn’t invent the car, nor did he put Rolls Royce out of business.
It’s often attributed to Henry Kissinger that he created the designation “useless eaters” but it’s really just the view of his class. Rand Paul upon getting elected stated that “we all work for the rich“. In the brave new world that we are entering this will be the only other designation. You will work for a rich man and maybe get enough to eat or you will be a “useless eater” and get the consideration you might expect, none. www.prairie2.com